Institutional Risk Analytics on Wednesday issued a research note that blisters the mortgage insurance industry for lobbying to get MI coverage included in the definition of 'qualified residential mortgage.'
Among other things, the report refers to MI as a "crime," adding that, "To us, any loans that fit the QRM designation should have 20% down payments, not second liens, MI or other structural 'enhancements' that ultimately undermine credit quality."
The report criticizes the sector saying, "Even letting MIs into the QRM discussion is really just another attempt to hide the fact that the private guarantee industry is a complete fraud."
The Mortgage Insurance Companies of America, which was given a copy of the report, had not commented at press time.
MI firms have paid out billions of dollars in claims over the past three years, depleting their capital reserves. However, during the housing crisis just one of the nation's seven MI firms went out of business.
Lobbyists for the sector have been trying to convince regulators that residential loans with MI coverage should be considered in the QRM definition.
Next week the Federal Deposit Insurance Corp. will unveil its QRM rule. According to a note issued by The Community Mortgage Banking Project, "the FDIC will move first on the rule, and we expect that the other agencies — OCC, the Fed, HUD, SEC and the FHFA — will be approving the rule in the days following the FDIC's action."
CMBP says that, "Once all six agencies have approved the proposed rule it will be published in the Federal Register, and the comment period — typically at least 60 days for a complex rule — will begin tolling on that day."
